Apple's High-Flying Stock Hinges on Supply Chain Overcome

Apple's stock has surged to near its all-time high due to the company's phenomenal business performance. The tech giant designs devices that define modern life for billions of people, and the market has taken notice.

The demand for Apple's products is genuine, with trend strength ranking in the top 22% of US stocks above one billion dollars in market value. However, investors are left wondering if there's anything left to buy at this price.

Apple's recent performance shows a company executing at an extremely high level. In its most recent quarter, iPhone revenue grew 22% from a year ago, while Mac revenue jumped an impressive 29%. Management attributed the demand to being 'remarkably better than we thought they would do.'

The quality of Apple's business is clear in the numbers. The company's operating margin over the last twelve months is 33%, far outpacing the S&P 500 median of 18.6%. Revenue growth of 14.2% over the same period also handily beats the 8.3% median for the S&P 500.

However, Apple trades at a price-to-earnings multiple of 38.8, a significant premium to the S&P 500 median of 22.1. Two significant business pressures are gathering that could end Apple's run: major supply constraints and soaring memory component costs.